As most readers probably know, Microsoft has recently given the Xbox 360 a major price cut. The Arcade version is now available for $199, the Core or Premium edition for $299 and the Elite unit for $399. That makes the 360 the cheapest current-gen home console on the market at this point, waving goodbye to the Wii as it passes by. Microsoft now says that sales at retailers have risen by 100%. That’s one heck of a performance.

“We are thrilled to be the first next-generation console on the market to reach USD 199, a price that invites everyone to enjoy Xbox 360,” said Don Mattrick, senior Vice President of the Interactive Entertainment Business at Microsoft.

The thing is, I’ve done some research in this situation - and the results are both thrilling and frightening. The price of the Arcade version was lowered from $280 to $199, that’s a 29% drop. The price was lowered by 29%, the sales increased by 100%. If Microsoft decides to reduce the price once more by 29%, the new price will be $141 per console. And as you now know, a price cut like that increases the sales by 100%. By now, Microsoft is selling four times as many consoles and have only lowered the price by 50%. If my calculations are right, Microsoft will be selling 32 times as many consoles after just three more price cuts with a price of only $50 per 360.

Now, if we could just get rid of those pesky hardware manufacturing costs..